German defense corporation Rheinmetall and Ukrainian state-owned corporation Ukrainian Ukroboronprom recently signed a memorandum of understanding on the establishment of a third joint venture operating in Ukraine.
According to the plan, the new company operated by Ukroboronprom and Rheinmetall will produce 155mm artillery shells with an output of 150,000 per year, expected to start in 2026.
The shelling plant will be located in an area where there is currently a German armored vehicle repair facility, which has been operating in Ukraine since the summer of 2024. However, the specific locations of both old and new factories have not been announced.
Experts say the partnership is seen as an investment for the future, but not for Ukraine, but as a lever to help Rheinmetall become Europe's leading arms producer.
Rheinmetall is Europe's largest ammunition manufacturer. Compared to the same period last year, Rheinmetall's first quarter 2025 sales increased by 46%, while its shares increased by about 1,500% since the conflict in Ukraine broke out in 2022.
This shows that cooperation with Ukroboronprom is not a charitable act at all. Although the plant's expected output is only 150,000 artillery shells per year, which are not considered enough to meet Ukraine's demand, it could still bring a large source of revenue to Rheinmetall.
The above business results are not naturally available, but are the result of Rheinmetall's prolonged efforts throughout the war years in Eastern Europe.
Some notable projects include Rheinmetall establishing many maintenance centers in Ukraine to serve the repair of Berlin-funded military equipment for Kiev. In addition, this group also actively trains and trains Ukrainian soldiers on the spot or in third countries.
Rheinmetall currently has two factories under construction in Ukraine, one for assembling armored vehicles and the other for the production of air defense systems. These are two types of equipment that Kiev officials say the Ukrainian army is lacking.
The group chose Ukraine as its destination because it enjoyed many incentives from both the Kiev government and Berlin. In May 2024 alone, Rheinmetall received a contract worth 150 million euros from the German government to supply weapons to Ukraine.
Kiev also created favorable conditions for Rheinmetall by cutting administrative procedures and committing to maximum support. Labor costs in Ukraine are significantly lower than in Germany, an economic factor that Rheinmetall can hardly ignore.
However, many experts expressed concern about the long-term operation of these facilities in the context that the Russian Armed Forces always consider all military production facilities on Ukrainian territory as legitimate targets.
According to experts, disguising factories as parking lots or civilian facilities will also be difficult to avoid Russian attacks, because in addition to technical means such as aircraft and satellites, Moscow's intelligence also has a network of local spies.
Therefore, even a small ammunition factory is an easily detected military target. Disguise can help withhide in the short term, but cannot ensure the safety of a production line if it operates long-term in Ukraine.
